On Tuesday, NVIDIA stock interrupted a wave of decline following Donald Trump’s statement on possible agreement on tariffs between the US and China. The technical picture also supports a rebound, but it is unlikely to reach far above the level of 105. Bears will try to seize the initiative at the earliest opportunity, since the fundamental background for NVIDIA stock remains rather gloomy.
Analysts are assessing what effect the ban on exporting H20 chips to China will have on the company. Its management is projecting a quarterly loss of $5.5 billion. Nikkei Asia reports that NVIDIA’s Chinese customers have secured nearly a full year’s supply of H20, but are already considering Huawei’s counterpart. Although it is still unclear how these chips’ performance differs from H20, Chinese firms are more likely to use them rather than trying to bypass the export restrictions.
According to Bloomberg, NVIDIA’s profit and revenue expectations fell 1.5% and 1.2%, respectively, over the past month. It is obvious that the updated forecasts do not reflect the full range of problems the company is facing. Earlier, Microsoft said it would significantly scale back its plans to build data centers, and Amazon’s similar intention was reported by Wells Fargo yesterday. Without ever-increasing demand from data center owners, NVIDIA will find it difficult to maintain its financial growth rate.
The start of the Q1 2025 earnings season in the US is to play an important part. NVIDIA’s report is due for release in late May, but its stock will be affected by results of other IT companies. Yesterday’s report on Tesla’s quarterly earnings signals that market participants should brace for unpleasant news and not bet too much on the growth of securities.
Short positions on NVIDIA should not be opened before the Stochastic indicator lines leave the oversold zone. The range of 105–110 may be suitable, and the target of a new wave of decline will be the level of 95.
Consider the following trading strategy:
Sell NVIDIA in the range of 105–110. Take profit – 95. Stop loss – 114.